Sausage Maker / Entrepreneur – Mentor, Siegmund Sumaruk

This Mentor is a fifth generation sausage maker who emigrated from Linz, Austria in 1965 when he was twenty- one. Through persistence and hard work, he has built a successful business that includes a sausage factory, a German deli, a meat market, a restaurant and wild game processing. He has also developed a regional market for his sausage with only minimal advertising based on his reputation for making quality products. When Siegi came to the US, his first job was processing meat in Waco Texas. He then worked for a sausage manufacturer and deli owner in Dallas and was later asked to start a similar operation in partnership with someone from Tulsa. The partnership did not work well and he decided to start his own operation at another location. Siegi raised money from a number of investors that allowed him to buy the equipment to get started. It took him over three years to build the business to the point where it was consistently profitable. After proving that he could succeed, he was later able to get the expansion capital to buy his own building and the equipment he needed to expand his operation using a bank loan rather than having to rely on investors. Despite the intense competition from larger sausage companies, his business continues to grow with his current factory now approaching its capacity. This article will be of interest to anyone wanting to understand the amount of effort and persistence necessary to succeed in this kind of specialty food business where you must compete against larger companies as well as anyone wanting to learn more about the changes taking place in this industry.

Overview

I am a fifth generation sausage maker who grew up in Linz, Austria. My uncle had immigrated to the US after the war and was working in Waco, Texas when he was killed in an accident in 1965. After he died, I traveled with my mother and sister to visit my Aunt. She was lonely and wanted us to stay. I decided to move and went to work at a kill plant in Waco, Texas. I was only twenty-one when I moved to Waco. But making sausage was something I already knew how to do from working in the family’s business in Austria. Our family had been sausage makers for over five generations. After a year, I was able to get a job in Dallas for Kuby’s Sausage House, a business that was started by a family of German immigrants only a few years earlier in 1961 where I could use my training. The Kubys were decedents of a long line of sausage makers who opened a store in Germany in 1728. Besides making sausage, the Kubys also had a restaurant, a meat market and a European grocery. They were very successful and I borrowed a lot of the things they had done to build their business when I started my own. Because their store was near Southern Methodist University, there were always some customers from out of state. In 1978, a customer from Tulsa asked me to start a similar operation there in partnership with him. I made the move but we did not work well together and in 1981 I decided to go out on my own. But I didn’t have any money and it took about $150,000 to buy even used equipment to manufacture sausage. So my wife and me went out and raised the money I needed by selling stock in $5,000 and $10,000 increments. When I opened Siegi’s Sausage Factory I was debt free, which made it easier because it took three years before the business was consistently profitable.

The original sausage factory was in a strip shopping center at 91st and Sheridan. We had the sausage making equipment in the back with a meat market up front along with a deli that also had some specialty European foods and an area where we served lunch. The first few years my wife and I ran the business by ourselves. But we gradually expanded to five thousand square feet in the same center and had eight employees by the time that we decided to move to a larger location. At that time, some property came up for sale about a mile away where we could build our own building. My sons put a business plan together to be able to go to a bank to get the capital I needed. So rather than having no debt service like when I opened the first location, this time I had a lot of bank debt from acquiring the new property, constructing a new building and buying more sausage making equipment. Because banks require personal guarantees, everything I owned was tied up in the business. It was a struggle for about four years after we made the move to develop the amount of new business we needed to support the extra overhead and debt service. But once we made it past that hurdle, we did well and continued to expand our business. We now have forty employees and sell our sausage throughout the state and in regional markets like Houston, Dallas and Kansas City. Most of that expansion has been by word of mouth based on the reputation we have developed for producing a quality product.

We have a number of businesses we run out of our one location. We have a meat market where we sell over twenty of our own sausages as well as fresh cut raw meats, deli meats, salads, cheeses and specialty groceries. We also have a German restaurant with traditional German foods and beer and also process wild game. These different profit centers help diversify our revenue.

It is a family run business. I have four children and all of them work with me in the business. It takes patience and good communication to be able to have your whole family involved in a business like we do. But I am blessed to have children who work hard and also work well together.

Operating the Business

We compete with the larger sausage companies by concentrating on producing a high quality product. All our sausage is made from muscle meat with no fillers and is made based on our family recipes. The original recipes were a little milder. But we added more spice to conform to local tastes that like a slightly spicier sausage flavor. Although it costs more to make sausage this way, people will pay for high quality products. Also because our customers like our products, they tell their friends. Consequently we have been able to grow the business by word of mouth advertising rather than having to pay for media ads. Right now our businesses has grown to the point where we are about at the capacity of our equipment and we are soon going to have to expand again if we want to increase our sales.

We get all the meat we use to make sausage and for our meat market from jobbers. There are few small kill floors and processors anymore and the large ones only want to sell a full trailer load of meat. A jobber buys a trailer and then breaks it down among a number of his customers. The consolidation of kill floors and meat processing into large operations also means that the role of a traditional butcher has changed. Most meat is now cut into steaks and roasts and is shrink-wrapped before it is shipped from the processor. So there are now fewer opportunities for meat processors and butchers outside these large companies. There is also not that many specialty food companies like ours that have been able to carve out a unique place in the market and compete with the larger firms. Most of the smaller sausage companies that are left are located on the East coast.

Sausage making equipment is expensive, When I started I was able to buy used equipment for $150,000. Now just one piece of new equipment can cost that much. But you have to also consider maintenance, which can be a significant expense. I learned to do some of the maintenance myself rather than have to pay for someone to come out from the manufacturer to do the repairs. I have also taught the people who work for me how to do our equipment maintenance. It is important that you can do most of this with your own people to hold down your operating expenses.

You also have to learn to deal with the government in any food business. We recently had two USDA inspectors in our factory for two weeks. It is important that you learn what the government standards are and that you comply. You don’t want the public to lose confidence in your operation like they would if you were ever shut down by a government agency for noncompliance with their regulations.

Key Points To Running The Business

It is important that you first learn how to do everything yourself and not just hire people to do things for you. That way you can train people to do their job the way you think is best for your business.

Learn how to do basic equipment maintenance yourself. For example, in my business things like compressors and chillers have to be replaced on a regular basis. If you have someone do this kind of work for you, their expense can be almost as much as the equipment they are replacing. Also if you would have to hire someone to do more complicated equipment maintenance, having worked on the machines you will know better how competent these people are when they tell you what is required to fix a machine.

You have to believe in what you are doing and be persistent. Every new business has its ups and down for the first few years. You cannot be discouraged when you face these problems. When I started on my own, things did not go well right away. I got behind on my rent and my investors told me to quit. But I didn’t know how to do anything else. I persisted and after three years the business grew to the point where we were consistently profitable.

You need to learn how to develop a business plan and budgets so you know where you want to go and how you are going to get there. Having a good business plan is also essential if you want to borrow money from a bank.

You have to be able to hire and train good people. The first thing many people ask me when I interview them is how much they are going to make and what hours do they have to work. Our busiest day is Saturday and the work can be physically demanding. I start people out at a low wage until they are trained and I see how hard they work and advance those people who I think will do well. I have one man working for me for several years that I started at minimum wage. But after a few years he was earning a lot more money and has been able to by four rent houses. Besides being a hard worker, he is also a good money manager.

Summary

I have a deep religious faith that has helped me persist when things were difficult while I was building my business. I also have a wife who stood by me and worked with me as we built the business together. Now all my family works with us. Both building the business and being able to involve my entire family has given me and my wife a lot of personal satisfaction. For those of you who have a unique idea or are highly skilled in some field and want to start your own business, I can say that if you are successful it can be one of the most rewarding things you will ever do. But you must have a good plan before your start, the financial staying power and the persistence to get you through the start up phase and the inevitable ups and downs of running any kind of business.

US Bureau of Labor Statistics for Butchers and Meat Processors

While owning a business like sausage manufacturing can be financially rewarding, BLS statistics show people employed as Butchers and Meat Processors generally have lower average wages than the average of $34,750 for all occupations in the US based on the 2012 census survey by the BLS. The average salary for butchers based on their last salary survey in 2012 was $28,490. Meat processors, which include slaughterers and meat packers, were slightly less at $25, 590. Most of these jobs were in the large slaughter and processing houses. Because more meat is being cut and shrink wrapped at the processing plants, the BLS says the need for butchers in retail stores is being reduced. Most of these large processing plants are located in rural communities in the Midwest and Great Plains.

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